Tuesday, March 23, 2010

Health Care Bill (Part I: Some Facts)

The health care bill has passed.  I do not want to comment on the political maneuverings employed to get the bill through the House, as I am sure readers of this post would lose all sense of security and confidence they have in the U.S. Government.  So, I will analyze the health care bill in light of facts, the incentives it creates, and the ideologies represented and rebuffed in the bill.

First, we should understand the facts of the health care bill.  According to the WSJ on Monday, March 22, 2010, the health care bill will cost $940 billion over 10 years.  It will reduce the projected deficit by $143 billion, and increase coverage by $32 million.  The number of people enrolled in insurance exchanges by 2019 will be 24 million.  There will be a new Medicare tax on unearned income of 3.8%.  The bill is 2, 562 pages long.

In the WSJ from the same day, Greg Hitt and Janet Adamy offer the following insights:
1) The legislation would expand Medicaid, the federal-state health program for poor, and create subsidies to help low-and middle-income families comply with a mandate that nearly everyone must carry insurance. 
2) Among other things, it would cut $427 billion from Medicare payments to health providers, establish a network of state marketplaces to promote insurance competition, and impose regulations on the insurance industry, including rules that prohibit them from denying coverage.
3) The CBO has said the legislation would extend health coverage to 23 million Americans now without insurance.  They also estimate the legislation as written would hold budget deficits over 10 years $143 billion lower than they otherwise would be.  Also, it ensures that 95% of legal U.S. residents have insurance by 2019, up from 83% today.
4) About 19 million lower-earning Americans would get tax credits to offset the cost of buying insurance, with the help stretching up to a family of four earning $88,000 a year.  A further 16 million people would get insurance through an expansion of the federal-state Medicaid program to make it available to family of four earning up to $29,000 a year.
5) Tax increases needed to finance the program would hit a range of industries, from insurers to tanning services.  Over the next decade, $108 billion in new fees will fall on insurers, drug makers and medical-device companies.  Families earning more than $250k a year will pay a higher Medicare payroll tax, and see that tax expanded to investment income.  High-value insurance plans will also be hit with 40% tax starting in 2018. 

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